Mr Saint 0 Report post Posted November 30, 2004 Someone with more experience than I (any that is) with Short Sales please feel free to enlighten me. I've recently spoke with a woman (called on one of my CAs) who has lost a job and is seriously facing foreclosure. I don't believe she is behind on her payments yet but she said she has just run out of her savings and will be falling behind shortly. I had considered doing a CA or SLO, but her payments are considerably higher than any rent payment would bring. She also was involved in some sort of loan fraud and got a second mortgage for way more than the house is worth. Here's the question: I'm thinking the only way to make this one work would be to contact the banks and ask them for some sort of discount and then go ahead and flip the property. Why, however, would a bank discount the mortgage when they could foreclose and recoupe most of their money?? Ok, what am I missing here? Share this post Link to post Share on other sites
MichaelC 160 Report post Posted November 30, 2004 Mr. Saint, do you know the total of all liens on the property, and the FMV of the property? Those numbers will impact what you can do. Share this post Link to post Share on other sites
Akinwale 0 Report post Posted November 30, 2004 Mr. Saint, do you know the total of all liens on the property, and the FMV of the property? Those numbers will impact what you can do.<{POST_SNAPBACK}> Speaking on foreclosures. A seller called me today asking what I do....(I love when the advertising pays off)... I let her know my speel and she stated that her home was going up for Sheriff's auction on 12/15. She owes about $80K on the property. Property's FMV (not sure specifically, because she didnt give me the address, but I know the area) is in the $130K range. She is 4 months behind in payments (about $3K). This sounds like a deal too good to be true. She wants to know how I can help her. I was wondering, how would I be able to utilize what I know about Lease Options to help her out? I know that I could easily go get a loan (i think) and buy the property for what she owes and save her from all of the trouble of foreclosre, ruining her credit, etc... Is that what I should do then lease purchase it out? Or is there a better route for me to take... Thanks for the suggestions, advice and help.. Happy Selling... Akin Share this post Link to post Share on other sites
Mr Saint 0 Report post Posted November 30, 2004 Mr. Saint, do you know the total of all liens on the property, and the FMV of the property? Those numbers will impact what you can do.<{POST_SNAPBACK}> She owes about $165,000 and I think it would sell right now for about $150,000. Her payments total approx $1,500/mo which is about $400-$500 above market rent for the area. That's all I know, would have to dig some more to see if there is anything else. I don't think there is, just the first and second. Like I said, she's not even behind yet, she just know's she will be in the near future. Oh yea, she has already entertained the thought of just letting it go to foreclosure. Share this post Link to post Share on other sites
MichaelC 160 Report post Posted November 30, 2004 Akin, do your due diligence and if the numbers you are suggesting prove accurate, stop anaylzing and move quickly. You don't have the luxury of time since the homeowner has contacted you so late in the process, and since she has probably contacted other investors, as well. If you can purchase the property outright, with approx. forty or fifty grand in equity, this might be the way to go. What kind of rent will it bring in? Could be a very nice buy and hold if the rental market is favorable.Mr. Saint, the homeowner being upside down like that doesn't bode well for an investment property. The only possibility I can see is, as you have already suggested, trying to negotiate with the lenders to cut their losses. And that is going to be an uphill battle at this point. The owner is current, the bank is probably feeling smug and has no idea there is a problem looming. I just can't see them inviting you in for a sit down and talk. This may be one property that you are better off passing on. Share this post Link to post Share on other sites
Mr Saint 0 Report post Posted November 30, 2004 MichaelC, Yea, I'm not thrilled about this one either. Actually, it's been a few weeks since I spoke with her originally. I may give her a call back and see if anything has changed. I might as well leave my number with her and she can call me back when the foreclosure is looming... Share this post Link to post Share on other sites
wilsdad 0 Report post Posted February 5, 2005 I work a lot with short-sales....when I come accross this scenario, I usually explain that I cannot suggest they do not make payments, but if they get behind 1 payment or more, I may be able to help them by buying the home from them at a discount if the lender will approve them for the program. There a lot of other factors to consider though... FHA, VA or conventional? If loan is FHA or VA, there are strict guidelines that can kill the deal...and also keep it skinny profits. One thing is they usually only take offer of 82% of appraisal. Also, they are not able to do short sale if the appraisal comes in at 64% of loan balance...I have lost 2 deals last year due to that one...it has to go through HUD program and the lender cannot allow a short-sale. Also, there has to be documented hardship from seller to qualify, so make sure seller can qualify and is willing to do the work to prove it. They will need hardship letter, income statement of income and outgo, 2 months pay stubs, 2 months bank statements and 2 years tax returns. It requires more work to get out of the loan than to get into the loan, so the seller can kill a deal if they are not on board mentally and have proper expectations. They also can expect to make no money in the deal, while watching you make profit, so that have to understand and consent to that as well. Most short-sale opportunities have only a small margin of profit and few will meet most investor formulas to pay cash to lender for the property. I don't reccomend doing any short-sales unless you plan to do several. It takes time and experience to improve the odds of any success. And it takes volume to make it a profitable adventure. It is not like other REI deals, where you go into it knowing you will exit with "X" dollars. It is a gamble of time and money to hopefully make some money after months of dealing with the lenders and finding buyers to place into the property. It is usually not worth all that pain and trouble to maybe make a few thousand dollars. I reccomend partner with a local person who has a systematized process to handle many short-sales and the staff to assist with them to handle more and more deals. It may be more profitable to split the money and put into their system....so you can remain free to find more deals and don't get bogged down with the short-sales. That is how I do it. I also spend some extra time to learn it. The more I learned about it, the less I want to do it,so I just keep putting mine into my partners system. It works great for both of us. You did the right thing to stay in touch with her...they usually come back as the pressure of the lender gets poured on them....and it will. my .02cents Share this post Link to post Share on other sites
